Coinbase Suspends Service in Wyoming Indefinitely -

Coinbase Suspends Service in Wyoming Indefinitely

Wikipedia; source:

Purse_Coinbase_article_1_BitcoinistAfter rumors of Coinbase not working for users located in Wyoming, Coinbase has since come out with an announcement that they will be indefinetly suspending service to users in Wyoming. This comes from an issue with The Wyoming Division of Banking in which recently communicated regulatory policy causes uncertainty for the legality of digital currency operations.

Also read: Legislators to Introduce Pro-Bitcoin Bill in New Jersey

Coinbase, in their post stated:

“Although we strive to provide continuous access to Coinbase services, Coinbase is indefinitely suspending its business in Wyoming.

 The Wyoming Division of Banking has recently communicated regulatory policies which we believe will render continued Coinbase operations there impractical. In particular, we understand that the Wyoming Division of Banking interprets the Wyoming Money Transmitter Act to require licensure of entities which offer hosted bitcoin wallet services, and that as a condition of such licensure, licensees must maintain dedicated fiat currency reserves in amount equal to the aggregate face value of all bitcoin held on behalf of customers. Although Coinbase securely maintains 100% of all customer bitcoin, it is impractical, costly, and inefficient for us to establish a redundant reserve of fiat currency in equivalent value.”

Since Coinbase is ceasing business in Wyoming, it is likely that more companies will follow suit and also pack up shop. The Wyoming Money Transmitter Act requires special License of companies which offer hosted Bitcoin wallet services. In order to hold such a license, companies must hold and maintain a dedicated fiat reserve equal to the face value of all Bitcoin held by the company. It is completely impractical for a company to hold all users Bitcoin plus the value of those holdings in fiat, doing so would require an unreasonably large holding of liquid assets. Such an act makes Businesses like Coinbase completely impractical in Wyoming and will seriously inhibit the ability for the industry to develop in the state.

What do you think about the Wyoming Money Transfer Act? Comment below!

Images via Coinbase and Wikipedia.

Drew Cordell

Drew is an undergraduate student at the University of Texas at Dallas, majoring in Business. He is an active member of the Cryptocurrency community, and enjoys collecting, trading, and writing about various coins. Outside of the digital currency world, Drew tends to spend his time with friends, playing video games, or studying. Feel free to email him with news tips or questions at [email protected]

  • I wonder how many more states we are going to see with laws enacted that adversely affect Bitcoin based businesses?

  • The just outlaw hosted wallets,not exchanges.

  • Would not be a bad idea. A customer not having control of their own private key is and has been an issue.

  • TimeTravel

    The initiation of force is always a bad idea.

  • Roger Ver

    Check out the LUXSTACK mobile wallet and trading app. It will make dumb regulations like Wyoming’s obsolete.

  • Close_Observer

    The government is run by mediocre people who don’t excel elsewhere, you can always outsmart them :)